Oxford Economics Study Shows How Adjusting Priorities Can Enable
Large Manufacturers to Increase Revenue by up to $200M, Reduce Costs by
up to $100M

ANAHEIM, Calif. & NEEDHAM, Mass. — (BUSINESS WIRE) — June 10, 2013 —
At PTC Live Global 2013,
PTC
(Nasdaq:
PMTC) today released the findings of a
ground-breaking
study by Oxford Economics that explores the factors driving a
strategic transformation in the global manufacturing industry. The
research, which involved both qualitative and quantitative inputs from
300 executives from around the world, also identifies the strategies
that manufacturers are adopting to transform their businesses and
differentiate themselves for competitive advantage.

Global manufacturers are at an important industry inflection point, the
study found. Market and technological forces are upending many
time-honored assumptions within the manufacturing industry. As a result,
more than two-thirds (68%) of manufacturing executives surveyed expect
their firms to undergo significant business process transformation over
the next three years.

“Our survey and interviews with market leaders show that manufacturing
companies are transforming their businesses in many fundamental ways to
respond to market shifts and technology trends,” said Lou Celi,
president of Oxford Economics Americas. “The priority for manufacturers
today is to make better things – creating innovative and distinct
products and services that meet customer needs – while continuing to
make things better. True competitive advantage can only be achieved by
tightly coupling the engineering, service planning and execution,
management, and production processes through which innovation can evolve
from conception to execution, and by creating a closed feedback loop to
ensure continual improvement and alignment across the business.”

Key Transformation Initiatives

The research found that successful transformation initiatives were
grounded on three broad themes:

Rethinking strategy and planning: The importance of the
decisions on how a company engineers, sources, manufactures, and
services its products, and coordinates these processes eclipses
operational execution as a competitive driver for most industry
sectors. For example, the study found that manufacturing executives
are placing an increasing importance on the coordination of strategy
and planning between engineering and service divisions, growing from
54% of respondents today to 73% in three years.

Adopting the service imperative: Historically, the service
dimension of manufacturing focused on repair and maintenance. Market
leaders are now blending their products and service capabilities into
new performance-based offerings. This will be the key to true
differentiation, as well as providing a significant revenue boost and
a guaranteed annuity stream. In fact, 77% of C-Level respondents
indicated that they will enhance services as a key way to
differentiate their products in the marketplace.

Fostering innovation everywhere: The emphasis on innovation
will grow even more during the next three years with increased efforts
in product strategy and engineering. Reverse innovation is a specific
aspect that is growing more popular, as firms design products for
emerging markets and bring them to developed ones (35% of surveyed
manufacturers practice this today, vs. 50% in three years).

Based upon the research, Oxford Economics concludes that well-executed
transformation efforts can produce significant business results. To
quantify those results for manufacturers, the report includes a
business-impact model that estimates how changing transformation
priorities—rethinking strategy and planning, greater emphasis on
service, and innovating everywhere, including in the area of
manufacturing operations—might affect revenue and costs. The model
assumes a “prioritization curve” that tracks the emphasis placed on each
of these three transformation activities and estimates financial
results. For example, a manufacturing firm with $5 billion in annual
revenue and a 20% profit margin could increase revenue by as much as
$195 million and reduce costs by $96 million by increasing its
prioritization of strategy and planning activities from moderate to high.

“The Oxford Economics study provides valuable insights into how the
manufacturing industry is responding to the need for new sources of
competitive advantage,” said James E. Heppelmann, President and CEO,
PTC. “This research is consistent with PTC’s mission of helping
manufacturing companies prioritize their strategy, planning and service
activities. By delivering technology solutions that transform the way
that products are created and serviced, we enable customers to transform
their businesses to achieve ongoing product and service advantage.”

According to the study, manufacturers will choose a variety of
approaches to transform their businesses, and may adopt multiple
strategies in response to market shifts. Among the more compelling
findings are that:

The concept of ‘design anywhere, build anywhere, service anywhere’
will grow 125% in three years.

Products get smarter. Smart products, which consist of mechanical
components, electronics, and software, will see a 38% growth on the
world’s stage.

New service business models come of age. By 2015, the use of
performance-based service contracts will be used by 65% of
manufacturing. Additionally, in the next two years, 56% of firms will
embrace remote diagnostics.

3D printing and additive manufacturing will grow 123% in use.

The supply chain becomes a key strategic asset. The number of
manufacturers increasingly leveraging their supply chains will nearly
double to 57% in three years.